Samsung Group’s Vice Chairman Lee Jae-yong and Hyundai Motor Group’s Executive Vice Chairman Chung Eui-sun have agreed to cooperate in the electric car business. It was the first time for the leaders of the top Korean conglomerates to meet at an open setting to discuss business issues. The meeting of the two leaders is significant as an opportunity to explore cooperation plans for future cars amidst adverse economic conditions posed by the COVD-19 pandemic.
Lee and Chung listened to a briefing held at the Samsung SDI Cheonan plant on SDI’s new electronic car battery, which has a 20% higher mileage than its previous versions. The briefing also included development reports on next generation solid-state battery, expected to have greater mileage and safety performance.
The two businesses have almost no history of working together over the last 50 years. There was an uncomfortable period when Hyundai expanded its business to semiconductors while Samsung made inroads into the automobile business. Given such background, the recent gathering of the two leaders may be a positive signal for the future of our economy.
South Korea is one of the few countries in the world that has globally renowned semiconductor, IT, automotive and high-tech battery businesses. Battery makers teaming up with Hyundai Motor will gain an upper hand in the global battery market, which is forecasted to reach 160 billion dollars by 2025. Gaining a reliable domestic partner will also be a win for Hyundai Motor as well, boosting its competitiveness in the electric car market, which is expected to occupy 30% of global car sales by 2030. Compared to other global automative and IT businesses, which have collaborated in various approaches in electric cars, connected cars and autonomous vehicles, South Korean companies had been relatively passive in business collaboration.
Lee’s Wednesday visit is the first public appearance after announcing the directivity of “New Samsung” at a press conference held on May 6, where he claimed to focus on areas where Samsung can do best while advancing into new businesses. It was also Chung’s first public appearance after becoming chair of the board of directors in March. President Moon Jae-in’s announcement of plans to promote future cars and other new growth businesses is also considered to have impacted the two leaders’ gathering.
Business opportunities for future cars lie not only in batteries but also in AI, systems, semiconductors and IT, which signal that the scope for collaboration can further expand. As reshoring, the process of returning the production and manufacturing facilities back to the company’s original country, expands, cooperation between domestic companies will become more important than ever. It is hoped that the two leaders’s meeting will further develop as a model for ongoing cooperation, leading the way for the Korean economy.